Business

Two Men and a Newsstand

In the Great Newspaper War of 2010, the field looks uneven. With The Wall Street Journal, Rupert Murdoch can spend whatever it takes (more than $80 million in his first year as owner) to smash a rival that represents everything he loathes. At The New York Times, Arthur Sulzberger Jr. has to keep his family united as he defends his cash-strapped fiefdom. Yet Murdoch’s latest salvo—the launch of the *Journal’*s Greater New York section—has been less than overpowering. Talking to Sulzberger and to Murdoch lieutenants, the author scouts the front lines.

Arthur Sulzberger Jr. is sitting on the 16th floor of his company’s headquarters, in the Churchill Room, lined with books inscribed by the British prime minister to Arthur’s grandfather Arthur Hays Sulzberger. The room is one of the few windowless chambers in the otherwise airy new headquarters of the New York Times Company, on Eighth Avenue, in Manhattan. Sulzberger, the publisher of the Times, is earnest as he leans forward to take issue with my use of the term “newspaper war” to describe Rupert Murdoch’s stated intention to “cripple The New York Times,” and the *Times’*s response to that threat. The irony of Sulzberger’s stance, given the Churchill Room’s pugnacious ambience, isn’t lost on Sulzberger. In this contest he isn’t a conscientious objector, much less a pacifist, but he is most definitely a semanticist.

“I think what’s important to understand is… ” Here Sulzberger pauses. “We don’t see this as a war.”

Three years have elapsed since Murdoch made his successful $5 billion offer for the Dow Jones company and its flagship newspaper, The Wall Street Journal. Since then, the Australian-born media baron has taken every opportunity to slag off Sulzberger and the Times Company. Murdoch has called Sulzberger a “wuss,” told him to “get a life,” and called his newspaper “abysmal.” He laughed with approval when his handpicked editor at the Journal, Robert Thomson, chose a thinly disguised photo of Sulzberger’s jaw to illustrate an article on effeminate men. Murdoch rarely misses an opportunity to denigrate the Times. But Sulzberger is adamant that he won’t rise to the bait. “At the end of the day, you choose your enemies,” he says. “You don’t let your enemies choose you.”

Observing Murdoch battle the Sulzbergers is a little like watching the Corleones pick on the Royal Tenenbaums.

Murdoch has clearly made his choice. His targeting of the Times is just the latest in a series of battles he has waged against real or imagined foes. Throughout his long career, which has spanned Australia, Britain, the United States, and beyond, he has fixed his gaze on an established competitor and picked away at its dominance. As owner of the Journal, he has added the further twist of taking one of the world’s most Establishment publications—the newspaper of record for the financial ruling class—and positioning it as a brash upstart challenging the elitist and overstuffed New York Times. In April, Murdoch launched his latest salvo in the battle, the introduction of a New York metro section, called Greater New York, aimed squarely at stealing readers and advertisers away from the Times.

His attack is part of a broader grudge match against the toffs, the chattering classes, and the top drawer of society on whatever continent he happens to find himself. The grudge match goes way back. From the moment he arrived at Oxford, at age 19, “he never wanted to fall for British values,” remembers Lord Asa Briggs, the historian, who was Murdoch’s tutor (and a friend of his mother’s, Dame Elisabeth Murdoch). “He wanted to appeal to the aspects of English life that many people shied away from.”

Murdoch’s News Corporation is one of the largest media companies in the world. Its entertainment businesses may dwarf its newspaper division, but the newspapers loom large in the minds both of investors (who don’t like their dismal prospects) and of Murdoch (who literally may love nothing more). The New York Times Company has one-fifteenth the revenue of News Corp., which made more from the movie Avatar than the entire Times Company made last year. The New York Times is the pride of the Ochs-Sulzberger family, now starting its second century as owners of the paper. The company’s purpose, according to its mission statement, is “to enhance society,” a phrase that may never have crossed Murdoch’s lips, or his mind. Its flagship newspaper has won 104 Pulitzer Prizes, more than any other. But last year cash was so low at the company that it suspended its dividend—a major source of income for family members—and took a large loan at a usurious rate from a Mexican billionaire.

The clash of these two entities—one born and bred to fight, the other intent on playing down conflict; one ruthless, the other cautious; one led by a 79-year-old right-wing entrepreneur obsessed with acquisition, the other led by a 59-year-old left-wing steward obsessed with preservation—makes for a highly asymmetrical battle. Given the images the families project, observing the battle between Murdoch and the Sulzbergers feels a little like watching the Corleones pick on the Royal Tenenbaums.

At stake for Murdoch are bragging rights for his News Corp. empire. The company grew out of a single daily newspaper in Adelaide, Australia, which Murdoch inherited in 1952, upon his father’s death. Besides the Journal, Murdoch’s global media empire today includes Fox Television and Twentieth Century Fox, a stake in Sky TV, and newspapers such as the New York Post and, in the U.K., The Sun and The Times of London. He has never met a newspaper war he didn’t win, at least in his own mind. And he has no other standard to judge himself by.

For the Times, the battle is a defensive one—to remain what it is while keeping what it has. The best the company can hope for is survival.

Family Therapy

Arthur Sulzberger has been the publisher of The New York Times since 1992. He also serves as chairman of the overall New York Times Company, which owns The Boston Globe, the International Herald Tribune, 15 other daily newspapers, and a group of Web sites, including About.com. Sulzberger proudly points out that there are six members of the fifth generation of his family working for the company. Sulzberger’s office is steeped in company history, which is to say family history.

During a long conversation this summer, he makes seven references to the “digital future” of the Times, but one has the sense that he’s trying to convince himself. What he really gets excited about is the historical resonance all around him. The boardroom holds signed photographs of every president since Teddy Roosevelt. His office holds a piece of shattered plate glass from Hitler’s picture window in Berchtesgaden, picked up by his grandfather in June of 1945. Even at 59, Sulzberger seems boyish.

The Times has been owned by the Ochs-Sulzberger family since 1896, when Arthur’s great-grandfather Adolph S. Ochs bought the bankrupt broadsheet and coined its slogan, “All the News That’s Fit to Print”—a jab at the yellow journalism of its competitors. The Times became the national paper of record. Arthur pursued a strategy of expansion in the 1990s, and the paper’s circulation grew outside New York but entered steep decline in its hometown. In 2009 circulation dipped below one million for the first time since the 1980s. The difficult economic environment and the defection of readers to free, online sources of news—including the newspaper’s own dynamic Web site—has forced severe layoffs and cutbacks. The company no sooner moved into its new glass-and-steel headquarters than it had to sell off the portion of the building it owned in order to raise money, leasing its own floors back. Cash was so tight that the Times, in January 2009, arranged for a $250 million loan from the richest man in the world, the Mexican billionaire Carlos Slim Helú, at a rate of 14 percent. Add to all this the newspaper’s editorial woes—from the highly specific (Judith Miller’s flawed Iraq reporting; the Jayson Blair scandal) to the broadly environmental, including a sense that the paper can never regain the dominance it once had, given the proliferation of news sources. In sum, the Ochs-Sulzberger family has had to face a complicated set of issues. And the family itself is one of them. Unlike Rupert Murdoch, who operates like a pasha, Arthur Sulzberger attempts to rule by consensus, and spends much of his time communicating, courting, and overseeing the relationships in his family.

Arthur’s chief rival in his own family is his cousin Michael Golden, who serves as vice-chairman of the Times Company and was once the publisher of the International Herald Tribune, in Paris. Several current and former Times Company executives told me that, if there is envy within the family over Arthur’s position as both publisher of the Times newspaper and chairman of the Times Company, it comes from Golden’s branch. When Golden, who trained as a potter before going to business school, returned from his stint in Paris, there was considerable buzz among some investors about his taking over one of the two main roles—publisher or chairman. Times Company insiders say it was never a serious consideration. A former Times executive told me, “If you presented him with a PowerPoint, he would be the one to point out on page 36 there’s a misspelled word the third line from the bottom.” But Golden, along with the other family trustees, plays a major role within the family as a liaison, alongside Sulzberger, between the corporate business of running the New York Times Company and the personal business of managing the Ochs-Sulzberger family. (The Times dismisses any talk of rivalry, saying the two men are “partners in running the company.”)

The family’s latest addition to the company’s board of directors is Carolyn Greenspon. At 41, she is the first member of the fifth generation to serve on the board—a source of great pride to Arthur, who sees her appointment as a sign of family devotion and continuity. Greenspon has been a psychotherapist for 18 years, and has a private practice in the leafy Boston suburb of Wellesley. She has recently started to work with a consulting firm that deals exclusively with families like hers. Fredda Herz Brown, a founder of the firm Relative Solutions, is a specialist in helping families with money work out interpersonal and intergenerational conflicts. “The point at which one thing becomes another is not always clearly defined,” observes the company’s Web site, next to a photo of a wooded mountain range reflected in a placid lake. “Relative Solutions exists at the intersection of economic and emotional concerns for the family.”

The main issue for the Ochs-Sulzbergers is whether they can sustain their loyalty to The New York Times even as the company becomes a financial drain on the inheritance of their children. The oldest living generation—made up of Arthur’s father, Punch, and his three sisters, Marian, Judith, and Ruth—are all in their 80s or 90s, and their presence makes it less likely for the moment that any of the youngsters, even if they are dissatisfied, will push for the family to get out of the business. One American newspaper dynasty that recently did take a buyout is the Bancroft family, which owned Dow Jones and The Wall Street Journal for 105 years, before selling to Murdoch. In the Bancrofts’ case, the death of their matriarch left the family without a natural leader. Small slights in the extended family widened beyond repair. Eventually, nudged by Murdoch’s money, they decided that they were doing neither the Journal nor themselves any favors by continuing to own Dow Jones. The Sulzbergers are different from the Bancrofts. They are actively involved in their company—the Bancrofts were not—and their trust structure gives rogue cousins much less power. There is a recognition in Arthur Sulzberger’s generation and beyond that simple decision-making—how will the next generation of trustees be chosen?—can balloon into major brawls, tight-jawed as such brawls might be in a family as polite as the Sulzbergers. That is why Sulzberger, Golden, and other trustees arrange meetings four times a year—once in person and three conference calls—for everyone in the family over 18, plus a family retreat “where we just have fun,” says Arthur.

That is also why Relative Solutions has entered the picture. Sulzberger says that Fredda Herz Brown has worked with the Ochs-Sulzbergers on “staying close as we get bigger.” He emphasizes that she has had no interaction with the New York Times Company per se: “It’s simply a matter of family dealing with family.” And he adds pointedly, “I won’t talk about that part.”

A Pig for the Taking

Rupert Murdoch’s business battles are celebrated, and therapists don’t figure in the after-action reports (except, maybe, for the victims). More than anything else about him, Murdoch’s battles have created his image. Without them, he stands for very little. He is not known as a philanthropist, and nothing about his career carries the label “redeeming social purpose.” Driven apparently by his own forward momentum, Murdoch is in essence a robber baron. Though he is a billionaire, with all the trappings that come along with it, he is almost bored by the accoutrements of wealth. Loyal to his employees and family, until he is not, he has managed to build his brand into one of the most divisive in both politics and business. He can be very irreverent, which makes him more interesting than most C.E.O.’s in corporate America. I followed Murdoch throughout his purchase of Dow Jones and got to know him during the aftermath of that acquisition, as he was disassembling the old culture of The Wall Street Journal in the name of improving it.

In buying Dow Jones, Murdoch continued on the trajectory—acquire papers at the low end of the market, then start acquiring papers at the “quality” end—that he has followed since his time in Australia. The Wall Street Journal was his opportunity, as some of his associates saw it, to redefine himself and his company in the U.S. away from the politically divisive Fox News and the raffish New York Post, the two parts of News Corp. that are most associated with Murdoch in the public mind, despite the company’s eclectic television and movie holdings. For Murdoch, the purchase was the culmination of a long effort to scale the pinnacle of the most powerful market for news in the world.

Now that he owns the Journal, he is in a position to reshape the information business at its highest end. Murdoch is known for his willingness to lose money on his news ventures, allowing his entertainment companies to pick up the slack. News Corp. was willing to put as much as $30 million into launching Greater New York. The strategy for that new metro section has been to hack away at the *Times’*s local advertising base, which has provided a significant source of revenue in the newspaper’s national expansion. Then, once New York was in play, Murdoch wanted to move beyond it to take on the Times nationally in other local markets and online, usurping its position as the nation’s top general-interest newspaper. In terms of circulation, the Journal is already there: under Murdoch, it has become America’s biggest-selling daily. The main uncertainty hanging over the company is not whether Murdoch himself has financial stamina or staying power but what will happen when he is gone. Murdoch is 79, though, as he frequently points out, his mother is still going strong at 101. He has always said he would like one or more of his children to succeed him.

So far, in his battle with the Times, Murdoch has been unable to define the fight—or the image of his newspaper—beyond saying that the Journal is better than the Times. “News Corp. gets defined much more by who it is fighting against than what it is fighting for,” says one of the company’s own executives. Even the name of his new section, Greater New York, seems to reflect Murdoch’s obsession with his Midtown rival. Murdoch’s formative newspaper experience came on London’s Fleet Street, and his attitude toward the Journal reflects it. British journalists have always reveled in their position as lowly hacks. Sir Simon Jenkins, who edited Murdoch’s Times of London from 1990 to 1992, before resigning on the eve of Murdoch’s epochal newspaper war with The Daily Telegraph, outlines the difference between British journalists and American ones when he says to me, mockingly, “We’re the lowest of the low and you’re the highest of the high.”

Murdoch’s newspaper wars “tend to look like demolition derbies,” says Bill Keller, of theTimes.“There is a lot of carnage.”

Andrew Neil, who edited Murdoch’s Sunday Times for 11 years, until 1994, etches the British view even more sharply. “America,” he says, “is dominated by a lot of lazy, sclerotic, big-city monopoly newspapers who basically have their own way, and produce papers for the benefit of the journalists rather than the readers.” Britain, in contrast, has “the most competitive newspaper industry in the world.” Neil goes on: “We fight a war every bloody day in this country for newspaper circulation. That’s the difference, and Murdoch understands that.”

Neil, a Scotsman, was a Murdoch confidant for years before a celebrated falling-out. He has become known as a critic of his former boss’s—the two haven’t spoken since Neil’s book, Full Disclosure (1997), outlined his professional infatuation and bitter breakup with Murdoch. One gets the sense that, if Murdoch invited him back in, Neil might be able to fall in love again. He certainly admits to being influenced by Murdoch’s views and politics. Neil continues, channeling Murdoch: “Americans have this patrician attitude that they have a God-given right to produce these boring newspapers and not be challenged to do it. The New York Times really thinks it’s the BBC”—or, more aptly, “the PBS of newsprint.” He goes on: “So, that’s what gets Murdoch’s juices going. He sees”—and here Neil pauses for emphasis and speaks the following words slowly and pointedly—“a fat pig there for the taking.”

In America, there is no aristocracy or upper class in the British sense of those terms. Powerful and successful parvenus like Murdoch routinely become the Establishment. But ever in need of a foil, Murdoch has identified The New York Times as the epitome of an entrenched elite. The personification of what he disdains is Arthur Sulzberger Jr. “He’s always wanted to do this, but he’s been a general without an army. He had nothing to take The New York Times on with,” says Neil. Now, with the Journal behind him, “he’s got his army to march on the citadel.”

The “Dirty Digger”

Murdoch went to Fleet Street in 1968 through his acquisition of the British Sunday newspaper the News of the World. Initially, Murdoch was an unassuming figure in London, but several months into his ownership, he decided to serialize the memoirs of call girl Christine Keeler, whose brief affair with British war secretary John Profumo had forced Profumo’s resignation six years earlier in one of the most sensational scandals in postwar British history. When the Keeler articles ran, the British establishment felt that dredging up the scandal was even more disgraceful than the original affair had been. Profumo, it was noted, had been quietly doing penance by working with drug addicts and ex-convicts in London’s East End.

Despite cries that he was “cashing in on pornography,” Murdoch, then 38 years old and described by Time magazine as a “hustling, young Australian,” defended the paper’s decision to publish, saying that he and his then wife, Anna, had read the memoirs and found them to be “a good lesson to all politicians.” A front-page story accompanying the first installment noted that “an ex-King of England” and four prime ministers had written memoirs, so “what is good for those out of the top drawer is also good for others who made a contribution to contemporary history.”

Murdoch appeared on television with David Frost, who attacked him, making reference to Profumo and saying, “There is a man doing a fantastic job of work and you are threatening that work by this story.” Murdoch responded angrily: “This easy glib talk that the News of the World is a dirty newspaper is downright libel and it is not true and I resist it completely.” Private Eye immediately labeled Murdoch the “Dirty Digger.”

The next year, he bought the Sun newspaper, turned it into a tabloid, and within a hundred days boosted its sales to one and a half million, according to an unofficial history of the paper, Stick It up Your Punter! In its review of the first issue of Murdoch’s Sun, the London Times, which was then owned by Lord Kenneth Thomson, observed, “Mr. Murdoch has not invented sex, but he does show a remarkable enthusiasm for its benefits to circulation, such as a tired old Fleet Street has not seen in recent years.” The first topless “Page 3 girl” would appear a year later, on the paper’s first anniversary under Murdoch’s ownership.

“He rejected the British establishment long before it rejected him,” says Anthony Smith, who was a BBC producer and is now retired as president of Magdalen College at Oxford University. “I remember the early moments when he came to this country. The News of the World was dirt.” In the early 1970s, Gerald Long, then the general manager of Reuters, attempted to arrange a détente between Murdoch and the British journalism world. Long invited 36 members of Britain’s media establishment to a dinner for Murdoch at the Savoy hotel. Upstairs, in a private room, Long gave Murdoch a solicitous introduction. He acknowledged that Murdoch had received criticism for his brand of newspapering, but heaped praise on the proprietor, clearly hoping the event could serve as a sort of industry-wide kumbaya.

Long then invited the attendees, one by one, to say something about Murdoch. Eyes darted around the table. “Nobody wanted to say what they thought, but nobody wanted to be heard saying what they didn’t think,” remembers Smith, who was there. Long picked someone randomly to start things off—a Canadian professor, Robert McKenzie, who had studied British elections and was a regular television presence in the U.K. Seated just three chairs from Murdoch, “he opened his mouth and told us how Murdoch had degraded the working-class papers, he had demeaned the dialogue in the country.” Murdoch barely reacted. “One of his greatest skills is not showing what he really thinks,” Smith says. But if Murdoch needed any encouragement to keep needling the Brits, he had received it.

In 1981, Murdoch took his first step into the quality papers of England by buying The Times of London and The Sunday Times. (Gerald Long became the managing director of The Times of London that same year.) Smith says, “He knew there was money to be made at the low end and then he discovered there was money to be made at the high end of the market.” The Times was so established as the country’s paper of record that George Orwell chose it as the organ of the totalitarian ruling party in Nineteen Eighty-Four. The Sunday Times, for its part, was the country’s leading outlet for investigative journalism. Murdoch immediately set about puncturing the egos of the staffs he inherited. “He seemed to despise us,” recalls Elaine Potter, one of the few journalists who protested Murdoch’s acquisition. Potter, now a trustee of Britain’s Bureau of Investigative Journalism, remembers the moment nearly 20 years ago that marked the beginning of the “humiliation” of working for Murdoch. On the first Saturday-night close of his Sunday Times, Murdoch appeared in the newsroom. “ ‘The only difference between The Sun and The Sunday Times is that one is more popular than the other,’ ” Potter recalls Murdoch saying.

Murdoch’s approach to *The Wall Street Journal’*s hierarchy was almost identical. He invited then Sun editor Rebekah Brooks to tour the *Journal’*s offices. He ran Journal stories in the New York Post. Even before regulators had approved his purchase of Dow Jones, Murdoch was invited to lunch with the Journal bureau chiefs at the Ritz-Carlton hotel in Battery Park, blocks away from Dow Jones’s old headquarters. He took with him Col Allan, the editor of the New York Post. The mere presence of the hard-drinking Australian editor, who is famous for his abusive screeds in the newsroom—he earned himself the nickname Col Pot, recalling the genocidal Cambodian ruler, when he edited Sydney’s Daily Telegraph—struck fear into the hearts of many of the assembled editors.

Perhaps in an effort to ingratiate themselves with their new boss, the Journal editors ordered wine with lunch. Neither Allan nor Murdoch joined them, ordering water and iced tea instead. The story circulated among News Corp. executives as further evidence of a disconnect with the effete crowd Murdoch had just inherited.

War with the Telegraph

Decades ago, when he was punching his card as a journalist to ease his path at the Times, Arthur Sulzberger worked for The Daily Telegraph as a summer intern. He also worked for two years as an Associated Press reporter in London. After Murdoch bought Dow Jones, Sulzberger decided to study Murdoch’s previous newspaper wars. Of all of them, Sulzberger decided, the one between Murdoch’s Times and Conrad Black’s Daily Telegraph provided the closest comparison to the one between the Journal and The New York Times. (Not that it’s actually a war.)

Envious of the *Telegraph’*s weekday sales, which hovered above a million copies, Murdoch decided in 1993 to experiment with cutting the cover price of his London daily, which then was selling around 350,000 copies a day. At first, The Times cut the price in selected markets, for a week or so, from 45 pence to 30 pence. Every time, the paper got a significant boost in sales. The Times then expanded the price cut nationally and made it permanent.

Conrad Black, the *Telegraph’*s owner, was determined not to get dragged into a pricing battle. After a year, however, “it became clear we were beginning to lose sales,” says Jeremy Deedes, who was the managing director of the Telegraph. “People were buying two newspapers for a time, and then it slowly became apparent: price did matter.” *The Times’*s sales were inching up, and the Telegraph was dipping below its “magic million” mark.

When, shortly afterward, the Telegraph cut its cover price from 48 pence to 30 pence to match The Times, the entire media sector shuddered. Stocks plummeted. Financial analysts declared the move “commercial suicide.” The editor of the competing (and sorely suffering) Independent newspaper wrote on his front page: “Two right-wing ideologues have set about destroying the quality market.”

And it only got worse. “As soon as we dropped our cover price, they dropped again!” says Deedes—to 20 pence. “We couldn’t believe they did it. And Conrad would try to rally us, saying, ‘You shouldn’t think his pockets are deeper.’ Well, it wasn’t true. They were.” Meanwhile, the Telegraph was feverishly launching new advertising-friendly sections (such as motoring) to make up for the lost revenue.

By 1996 The Times had dropped its price to 10 pence a copy and its circulation had risen to more than 850,000 copies a day—within striking distance of the Telegraph. The government would ultimately launch an investigation into Murdoch’s predatory pricing. Both newspapers fell deeply into the red, and both started raising their prices again. By September of 2005 the price of both The Times and the Telegraph was 60 pence.

“We never recovered,” Deedes says today, looking back on those tumultuous years. Sulzberger draws a broader conclusion: “They both lost,” he says, almost pityingly.

Kissing the Ring

Standing before the eight-foot-long wall of tightly packed newspapers displayed in a typical London newsstand, I’m struck by the bright cacophony of headlines and photos. There’s an enthusiasm here, a rambunctiousness long absent from the American newspaper scene. Indeed, there are no newsstands in the U.S. to speak of—not with a riot of newspapers on sale. Most of America’s newspapers are quietly delivered to the doorsteps of the dwindling number of Americans who still subscribe to them.

The array of choice in British newspapers is the work of Rupert Murdoch—or so I’m told time and again in the course of a recent visit. Had he not taken on the truculent British print unions and moved his newspapers, under cover of night in January 1986, to a secretly constructed printing facility in the suburb of Wapping, Britons would be reading only three national newspapers today, not seven. Even Murdoch’s enemies give him credit for this. In a way, London is a city afflicted with a kind of Murdochian Stockholm syndrome. Though he still nurtures a sense of being unfairly attacked, Murdoch has become a fixture of British life. At the same time, his insistence on printing the most salacious details about the famous and humble alike—those “aspects of English life that many people shied away from”—has led to an overall coarsening of public discourse. It is his trademark legacy. He rewards his tabloid editors when they break industry taboos and print what was previously deemed unprintable. What outraged people about Murdoch when he arrived in Britain 40 years ago would barely raise an eyebrow today.

And some of the things that spark outrage today would scarcely have been contemplated a generation ago. The *News of the World’*s recent phone-hacking scandal is a case in point. The editor of the News of the World, Andy Coulson, resigned in 2007 after one of his employees pleaded guilty to paying private investigators to hack into the phone records of the royal family. This past February, a highly critical parliamentary report accused News of the World executives—who had been summoned to give evidence on the matter—of “collective amnesia” and “deliberate obfuscation.” News Corp. has authorized settlement payments of at least £2 million for breach of confidence and privacy to several people whose phones had been compromised.

Reading the report, one gets the strong impression that these were not isolated incidents at the News of the World. British tabloids make heavy use of private investigators to uncover compromising information on people, including politicians, military officers, and police, as well as the royal family. Four private investigators with criminal records have reportedly been employed by the News of the World in recent years; one of them worked for the paper before and after a seven-year jail sentence for framing a woman (with planted cocaine) to prevent her from getting custody of her children, and he has now been accused of the murder of his former business partner, who was found with an ax in the back of his head.

Andy Coulson, the editor who resigned, is now Prime Minister David Cameron’s top press officer. It is as if President Obama had chosen National Enquirer editor Barry Levine instead of Robert Gibbs for the comparable White House job. Rupert Murdoch’s political involvements are both easy and hard to trace—easy because his newspapers weigh in very publicly, and hard because his hand is often unseen. He is not an ideologue—if promoting left-wing causes were good business, or if politicians on the left were good for business, no one doubts where he would apply his influence. Murdoch has almost always found himself on the side of right-wing causes, or, as in the case of his cozy relationship with Tony Blair, siding with the rightward movement of the Labour Party. Murdoch says he has never asked for a political favor, which may even be true. On the other hand, he may not have had to ask.

In the U.S., Murdoch’s influence in politics has come mainly through Fox News. In Britain, his presence looms over every election, large and small. The famous headline IT’S THE SUN WOT WON IT—after the 1992 British election for prime minister went to the Conservatives—has been a reference point in U.K. elections ever since. Tony Blair courted Murdoch assiduously in his successful 1997 bid for prime minister, once traveling halfway around the world to attend a News Corp. conference—a supreme moment of ring kissing. The relationship between Blair and Murdoch was close. In his diaries, Blair’s top spin doctor, Alastair Campbell, described a Downing Street dinner for Mr. Murdoch and his sons, James and Lachlan, in 2002: “Murdoch pointed out that his were the only papers that gave us support when the going got tough. ‘I’ve noticed,’ said TB.” Lance Price, who worked for Campbell, later wrote, “I have never met Mr. Murdoch, but at times when I worked at Downing Street he seemed like the 24th member of the cabinet. His voice was rarely heard … but his presence was always felt.” Murdoch’s power, says Price, is rooted in fear of what he might do as much as in fear of what he has actually done. It comes not only from what his papers print, but also from what they might know but do not print. He holds sway by implicit threat.

The View from on High

At the launch party for Greater New York at Manhattan’s gloomy Gotham Hall, in April, Murdoch reminded his guests of his record in past battles. “News Corporation is no stranger to providing better choice to consumers wherever it is lacking,” he told the crowd. He was flanked by Robert Thomson, *The Wall Street Journal’*s editor.

Thomson, a fellow Australian born 30 years to the day after Murdoch, is more cerebral than the typical Murdoch editor. He is also a deft marketer. He was popular with his staff at The Times of London, but it has taken him longer to warm the newsroom of The Wall Street Journal. Thomson’s wife, the daughter of a Chinese general, is friendly with Murdoch’s third wife, Wendi. Murdoch and Thomson are remarkably close, and what comes out of Thomson’s mouth often got its start in Murdoch’s head, and vice versa. Thomson occasionally takes off his editor’s hat to lash out at News Corp.’s business rivals, notably Google (which he has called a “tech tapeworm”) and The New York Times (which has suffered from “a decade of decline”). Thomson is partial to alliteration.

At a dinner at Sir Martin Sorrell’s home earlier this year, Sulzberger, who had never met Thomson, made a point of introducing himself. As it happens, the dinner was given shortly after the Journal featured Sulzberger’s jaw in that article about effeminate men. Thomson himself had suggested the photo and approved the layout. After saying hello to Thomson, Sulzberger recalls, he returned to a conversation he had been having with some other guests. Then Thomson came over. “Within a couple minutes he pulled me away from that, and that’s when he told me that my face had not been used in that montage, which is just a lie. He flat out lied to me. When I asked him to run a correction or a clarification, he sort of waved his hand as he does and said, ‘We don’t do that kind of thing.’ ” Sulzberger waves his own hand dismissively, mimicking Thomson’s gesture. “But talk about a Fleet Street moment, right? It’s a Fleet Street moment. The thought of an editor of The Wall Street Journal lying is literally unthinkable. It is literally unthinkable. It was unthinkable until then.” Thomson, who calls the incident with Sulzberger “the battle of wounded chin,” has told friends that Sulzberger misunderstood the exchange at Sorrell’s party. Thomson never tried to distance himself from the photo. Of course he had approved the photo—he had suggested it, in fact—and all he said to Sulzberger was that he was surprised by the way it had been interpreted in the media, as Thomson’s suggesting Sulzberger was effeminate. As for its being a Fleet Street moment, Thomson told friends that if one were going to go after someone in Fleet Street style (which he has no wish to do), the attack would be much more blatant. While working for Murdoch in London, Thomson had seen his own head superimposed on a lapdog’s body in the rival Mirror newspaper, for instance.

The launch of the New York section came after Murdoch had already expanded the *Journal’*s news coverage to include more politics, sports, arts, and culture, all in an effort to siphon away the rival’s audience. “Time and time again, I’ve seen hungry consumers wanting more, but tolerating less,” Murdoch told the guests at the Greater New York launch party.

Despite Arthur’s protestations that he is not at war, the Times has indulged a spasm of aggression over Greater New York. On the day of the section’s launch, Arthur and his C.E.O., Janet Robinson, issued a memo to staff—widely circulated by the *Times’*s P.R. department to other news outlets—welcoming “a new competitor” to the New York scene. “Some folks just have a different learning curve,” the memo began in a jokey, condescending tone. “After 120 years of existence, The Wall Street Journal this morning has finally decided to cover New York north of Wall Street.” The memo went on to describe the *Times’*s purported dominance in New York, both in readership and advertising. It then closed, “So as our welcome gift to New York, we pass on a few helpful hints to our Journal colleagues: the Dodgers now play in Los Angeles, SoHo is the acronym for South of Houston, Fashion Week has moved to Lincoln Center, Idlewild is now JFK, and Cats is no longer playing on Broadway.”

Overall, Sulzberger seems to have determined that a fighting stance is not necessary, or necessarily advantageous, when discussing the Journal. This could be due to the fact that, so far, the Greater New York section seems not to have hurt his paper. Despite months of buildup, Greater New York has so far proved a dud. In its assessment of the launch, Ad Age wrote, “The Journal, it seems, has showed up at the first battle of The Great Newspaper War of 2010 armed with nothing but a spoon and some paint cans.” The section has occasionally carried a single eighth-of-a-page ad.

“When he bought the Journal and talked about taking on The New York Times and killing it, we spent a lot of time and energy trying to calculate what he would do,” says Bill Keller, the *Times’*s executive editor. “That sense of anticipation and girding for Murdoch lasted up until his New York section launched, and that was kind of the point where you had the sense that the emperor has no clothes. It was so amateurish, you sort of heard a collective sigh of relief.”

Lately, that sigh has been mixed with a few snickers. One day, Keller noted a photo on page 3 of the Greater New York section of two dented bumpers, essentially outlining the aftermath of a fender bender—as if that constituted “news” by New York’s elevated standards. Another story outlined a one-week spike in the murder rate in the city. The Times newsroom gleefully noted that you could get to a spike only if you measured the week from Tuesday to Tuesday. Overall the murder rate was falling. “It’s a small-town news section in a big city,” Keller says.

“I read the Journal a little less now. I find that I can skim it in a way I couldn’t before,” he adds. And, as if he hasn’t sniffed dismissively enough, he concludes, “If the Journal is gaining market share I’d guess it is more at the expense of USA Today than the Times.”

Janet Robinson says the Greater New York section, which has been offering deep discounts to lure advertisers, sometimes as much as 90 percent, “hasn’t made a dent” in the advertising rates of the Times. Murdoch’s anti-Times rhetoric “is not resonating with our advertisers, it’s not resonating with our readers, and quite frankly it’s not resonating with the American public,” says Sulzberger. “That’s not how we see these things.”

Sulzberger does have his fears, he admits, but they are larger, systemic fears about what Murdoch represents for the nature of the newspaper business. He talks openly to friends about how none of Murdoch’s papers have improved journalistically under his ownership—not the Times, not the Sunday Times, and not the New York Post. “I think from a journalistic perspective there was the fear that The Wall Street Journal would become less reputable, and that might pose certain journalistic challenges to us. That fear has not lived out, either.… You could argue whether it’s more or less reputable. I’ll leave that to others to judge, but it journalistically has not proved to be a concern.”

Sulzberger runs into Murdoch from time to time, and the encounters are cordial enough. Most recently, they met at a dinner at New York mayor Michael Bloomberg’s residence, in honor of David Cameron, who was making his first visit to the U.S. as U.K. prime minister. Arthur Sulzberger recalls, “Mike was at the microphone and just basically giving a brief introduction to the P.M. and said something to the effect of ‘Mr. Prime Minister, I hope you caught that wonderful New York Times front-page story on all the tremendous things you’re doing in Britain.’ ”

Sulzberger smiles, almost giggles. “I looked right at the table over there”—he looks over his shoulder—“and there was Rupert.” Sulzberger frowns in his best grumpy-Murdoch impression. “Rupert owns The Times of London, The Sun, The Wall Street Journal. He helped elect this guy and here he is with all of his peers in New York, and it’s The New York Times that’s being lauded by Mike Bloomberg! It was a hysterical moment.”

Survival of the Fittest

Twenty years ago, Rupert Murdoch gave the MacTaggart Memorial Lecture at the Edinburgh International Television Festival. His attack on the “sneering” duopoly of the BBC and ITV made waves. Last August, James Murdoch, Rupert’s younger son, delivered the same lecture at the same event. Invoking Darwin’s The Origin of Species, he urged the British media industry to embrace “private enterprise and profit” and reject the “creationism” of the BBC and the country’s official media watchdogs, which he called “unaccountable institutions” backed by “the belief in a managed process with an omniscient authority.” He labeled the growth of the BBC “chilling” and said that the “expansion of state-sponsored journalism is a threat to the plurality and independence of news provision.” One can take his remarks at face value, but one can also discern a larger message: Rupert will one day be gone, but there is a like-minded Murdoch not just in the wings but on the stage.

James Murdoch is the only one of Rupert’s children who is still a News Corp. executive. Lachlan, the elder son, sits on News Corp.’s board, though he has defected from the family business. (Lachlan’s stunning departure—he was long considered the heir apparent—came after a painful power struggle with Fox chief Roger Ailes, a fight in which Rupert backed Ailes and allowed Lachlan to founder.) Elisabeth, their sister, left the company to run her own highly successful production firm in London; she is married to Matthew Freud, a great-grandson of Sigmund’s and nephew of Lucian’s, and a powerful London public-relations executive. When News Corp. bought Dow Jones, Rupert made James the C.E.O. and chairman of the company’s businesses in Europe and Asia, which gave James control of all the British newspapers, the satellite operator Sky Italia, and Star TV in Asia. It was the closest thing to a formal anointing that James had ever received.

James speaks in a business-school language his father avoids. Without irony, he refers to the “all-media environment” in which News Corp.’s consumers operate. But raised in Murdoch’s “us-versus-them” world, James is still fighting plenty of his father’s old battles. He displays a life-size statue of Darth Vader outside his glass-enclosed office in London, embracing the “Death Star” epithet earned by Star TV during James’s chairmanship.

James has been backing an effort—code-named “Alesia”—to establish a paid online model for all of News Corp.’s newspapers, similar to the pay-TV model he oversaw at Sky Television, which News Corp. owns a stake in and is trying to buy outright. (News Corp. already charges people to read The Wall Street Journal online and recently put The Times of London behind a pay wall.) He is making a deliberate attempt to recast his father’s reputation—from merciless thug to enlightened buccaneer. The name Alesia, selected by James, a history and archaeology buff, refers to the town where, in 52 B.C., Julius Caesar waged a bloody battle and won Gaul for the Roman Empire. “One thing about that battle,” says a source close to James, “was that it was really, really hard.” The barbarians in this case are the Googles and Huffington Posts of the online world, who “steal” News Corp.’s content. If Alesia does what James hopes, the result will be a “digital storefront” for news sites both owned by and independent of the News Corp. empire. In other words, Alesia would be a paid multi-media alternative to Google on iPads and other tablets, enabling consumers to search for and use News Corp.—curated content.

James doesn’t share his father’s passion for the newspaper business. Bankers love to draw up plans for the post-Rupert News Corp. “breakup.” Newspapers are so challenged that Rupert and his executives perennially discuss selling them or spinning them off from the rest of the company, but those discussions are always shelved—at least for the time being.

It is noteworthy that Murdoch left the handling of endorsements in the most recent election in Britain to James. To no one’s surprise, the Murdoch newspapers backed the Conservative Party candidate, David Cameron. Presumably, the Tories would govern with a lighter regulatory touch than either Labour or the Liberal Democrats; moves such as acquiring the 61 percent of British Sky Broadcasting that News Corp. doesn’t own would get an easier ride. James has shown himself to be somewhat hotheaded in upholding the family’s political honor—more like Sonny Corleone than Don Vito. In April, James Murdoch opened up the Independent newspaper to see a house advertisement for *The Independent’*s election coverage. The ad declared, “Rupert Murdoch won’t decide this election. You will.” To the younger Murdoch, it was a thumb in the eye. The Independent has a circulation of under 200,000, not even a tenth of the circulation of The Sun. It was hardly a threat to News Corp., or likely to sway the British election. The ad was an intolerable affront.

James Murdoch and Rebekah Brooks, the former editor of The Sun, whom James has elevated to run all of News Corp.’s newspapers in the U.K., happened to have a meeting that day in *The Independent’*s headquarters. The newspaper’s editor, Simon Kelner, was surprised to see Brooks and Murdoch turn up in the middle of his newsroom. Murdoch, deeply agitated, was holding a copy of the ad. “What are you playing at?” he demanded of Kelner, gesturing to the paper.

“I was sort of embarrassed for the people around me, and I was embarrassed for them, and I was embarrassed for myself as well and slightly sort of … ” Kelner trails off, shifting in his seat and leaning back against his couch until he is almost reclining. “Nervous … not nervous, that’s the wrong word. Slightly threatened by the aggressive approach. … I felt a little bit violated, without sounding too prissy about it.”

Kelner led them into an office. “I think what really annoyed [Murdoch] was my air of bemusement, because I really didn’t understand why they were so angry about it.” Kelner remembers James saying, “You’re a fucking fuckwit. You’ve impugned our family name.” To which Kelner adds, “For those of us who are not part of the Murdoch organization, that’s rather amusing.” After a lengthy rant, Brooks and Murdoch stormed off. Kelner later heard from a high-ranking News Corp. executive that “it was a social visit that went wrong.”

Someone close to James says his reaction stemmed largely from his irritation that Kelner, who socializes frequently with James, his sister Elisabeth, and her husband, Matthew Freud, and who “has never hesitated to be friendly and hang out and come to parties,” had acted at the last moment of a heated election, and without so much as a heads-up.

Kelner continues, “It’s very hard for the sons of big, successful dominant fathers. But I’ve always found James, socially, perfectly friendly. The one thing that many people have said to me is that Rupert Murdoch would have been horrified when he heard about [the episode], because it’s not his style.

“It was like the Red Army of China taking on Andorra.”

Declaring Victory

The New York Times is not Andorra, but it is certainly small by comparison with News Corp., and Murdoch, bigger and richer, will keep on taking swings. The Journal has already expanded its coverage of politics and sports, and is now focusing on fashion, the arts, and lifestyle, to go head-to-head with the Times. The newspaper has hired Deborah Needleman, the former editor of Condé Nast’s now defunct Domino home-furnishings magazine, to edit the glossy WSJ magazine. As an audition, Needleman helped the paper plan the upcoming relaunch this month of its Saturday edition, which News Corp. hopes will turn around the *Journal’*s money-losing weekend effort to directly challenge the dominant Sunday Times. Thomson says the strategy for the Saturday Journal is simply “to have the best weekend paper in America.” The newspaper is also working to expand its distribution of the Journal through better display of the paper and free access to wsj.com in Starbucks stores. The *Journal’*s circulation will continue to grow, and the Times will not overtake it. Murdoch lost more than $80 million in his first year owning the Journal and has the wherewithal to lose more, which means that he is playing by economic rules that don’t pertain to the Times. He also has ambitions further afield. As Thomson puts it, “The reservoir in Central Park is not the only body of water in the world. We have many other oysters to shuck.” A major priority of his during the coming year will be to go “on the offensive” against Reuters and Bloomberg through something called WSJ Pro, which will use wsj.com as a “funnel of love” to direct readers to more specialized (and expensive) sites. And if Dame Elisabeth is a bellwether, Murdoch has another two decades of fight in him.

The Times, on the other hand, can’t afford to be unprofitable, and is barely scraping by. It possesses no large pool of capital for future investment and needs to begin paying back the money it borrowed from Carlos Slim Helú. And if family members don’t start getting dividends, some of them may look for other options. Sulzberger acknowledges that the family has discussed going private, or moving the Times into a not-for-profit trust structure, as “almost due diligence,” for maintaining their independent status for the future. Sulzberger-family ownership of the Times, he says, is “not in question.” Acknowledging a key strategic error, the newspaper is planning to re-introduce a fee for parts of its Web site early next year. The first brief and unpopular effort, dubbed TimesSelect, which put the paper’s op-ed writers behind an online pay wall, was canceled in 2007, and since then all content has been free. The *Times’*s need for subscription revenue became urgent after the advertising market cratered two years ago. The uneven recovery the newspaper has seen recently—its digital-ad revenue rose by $8.3 million in the second quarter of this year, even as print-ad revenue fell by $15 million—cannot sustain a business model based entirely on advertising. (The Journal, which has always charged for online access, generates roughly $65 million a year in subscription revenue from its site.) The Times has taken other steps—for instance, hiring a new editor, Sally Singer, formerly of Vogue, to edit T magazine, its fashion-focused advertising platform. The Times recently announced that it would launch something called Press Engine, a combination consulting business and platform to help other newspapers create applications for the iPad and other, similar devices. (The Times was the newspaper most prominently featured in Apple’s launch of the iPad.) It is also noteworthy that, for the past several months, a team of Times journalists has been working on an investigation of the *News of the World’*s phone-hacking scandal and the involvement of News Corp.’s management in covering it up. No one describes that investigation as a deliberate salvo in the newspaper war—it’s simply the kind of story the Times would be pursuing anyway. (Isn’t it?)

As we talk in the Churchill Room, Arthur Sulzberger tells me about a journalism-awards ceremony he recently attended, at which the Times, as usual, was being recognized. “I know, trust me, I know,” he says, rolling his eyes and shaking his head dramatically, “what Rupert says, and what others say, that they don’t care about awards.” He looks skeptical. “The last time I heard something like that was from [Chicago Tribune owner] Sam Zell, on the stage, who knew I was in the audience, and he said, ‘It’s not about Pulitzer Prizes. It’s about profits!’ Turns out he had neither.” Sulzberger looks scornful. “So, I’ve heard this before. People who don’t win prizes generally say they don’t care about prizes. But what they do care about is peer recognition. Because at the end of the day, that’s how we judge our effectiveness. That’s what the Pulitzers are. It’s our peers saying these are the great pieces of journalism in this period of time. And you know … ,” he says, pausing meaningfully. “You’ve known the results over the last few years.” He is so coy and oblique that it takes me a moment to catch his drift: he is pointing out that the Journal hasn’t won a Pulitzer since Murdoch bought the paper.

Murdoch would agree with Sulzberger, up to a point: he would agree with the idea that winning prizes is a sign of journalists’ writing successfully for themselves. As the *Times’*s circulation drops, Sulzberger tells people that his goal is not to be the largest-circulation paper in the country, which the Journal now is, but rather the “thought leader,” which is, of course, the very quality that Murdoch would like to acquire. The *Times’*s reputation is the key to its business, Sulzberger says. High-quality journalism leads to high-quality readers and advertisers. But when I ask Sulzberger how he would define “winning” for The New York Times, he couldn’t sound more bloodless. “Winning for this institution is successfully transforming a print-based enterprise into a fully functioning print-and-digital multi-platform enterprise that has good profitability and good growth.” Losing would be “failing to do those things.” This is not exactly the Saint Crispin’s Day speech.

“His newspaper wars tend to look like demolition derbies,” Bill Keller says of Murdoch. “Nobody really wins, but there is a lot of carnage.” Keller points not only to The Times of London’s war with The Daily Telegraph but also to the *New York Post’*s battles with Mortimer Zuckerman’s Daily News. “Can you say he won either of those wars?” asks Keller. “You can’t say he raised the standards or the I.Q. of those publications.” Of course, for Murdoch, I.Q. may not be the ultimate definition of success.

Which leads directly to what may lie ahead. It is possible to imagine a future, maybe even a likely future, in which The New York Times continues to do what it does—the daily reporting, the in-depth special investigations, the wide-ranging cultural criticism—for an ever more rarefied audience. It will be able to say that it has come through existentially intact, even if its influence is not remotely like what it once was. And it is possible to imagine a future in which Murdoch’s Wall Street Journal emerges as the predominant print publication in America for news of all kinds, but never comes close to being regarded as the nation’s most respected voice. Over time, the two publications would increasingly diverge, to the point where they were no longer true competitors.

It is a future in which each newspaper could claim a sort of victory in its own eyes, and yet still look like a loser in the other’s. I worry about that future—the loss to us all could be considerable. But for a war that isn’t really a war, it may be the most natural way to end.